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Have you ever made a bet? Was that bet against the market? The medium for this type of betting is known as the derivative market – and it may lead to a global financial crisis.

Derivatives…an example of gambling on the market. Photo by: The Economic Collapse.

But what exactly is the derivative market? What is a derivative? A derivative, according to Investopedia, is “a contract between two or more parties whose value is based on an agreed-upon underlying financial asset.” Basically, the value of the contract derives from the underlying asset. Common assets typically include commodities, interest rates, and bonds. You can think of it as a bet. For example, person A tells person B that the price of oil is going to rise starting at $100 per a barrel. To officially promote his claim, person A and person B sign a contract based on person A’s speculation. Now, if the price of oil rises above $100 per a barrel – say, $120 per a barrel – person A receives the difference between his speculated price and the current price (in this example, $120-$100 = $20). If he is wrong, person A loses that margin. The derivative market is simply the medium in which derivatives are traded.

A derivative can come in many forms, including futures, options, swaps, and warrants. For example, speculators may use a futures contract to make a profit on their conjecture of a commodity price increase. Farmers may also use commodity derivatives as insurance on their product. For example, a farmer may lock in an acceptable price of their produce, saying the price of their commodity is going to be lower. If the price does drop, the farmer still makes a profit on the difference between his set price and the current price.

To put derivatives in basic form, it is a bet on the market. Whether that bet is based on the price of a commodity or rising insurance rates is entirely based on the contract between the two parties.

Derivatives can be a feasible method to hedge your funds, just as in the case of the farmer. However, as with any form of gambling, there is a risk that can lead to a financial crisis.

With trillions of dollars of exposure to derivatives, several of the world’s largest banks have surpassed their amount of assets (see figure 2). The problem here is the fact that, if a bank loses out on their bet, they do not have enough assets to repay it.

The “Big Banks”… a comparison of their total assets and their exposure to derivatives. Photo by: The Economic Collapse.

A similar problem was encountered in 2008, with the crash of Lehman Brothers bank. According to Steve Denning, in an article contributed to Forbes magazine, “the root cause wasn’t just the reckless lending and the excessive risk taking. The problem at the core was a lack of transparency.” After the collapse of Lehman Brothers, no one knew the risks any particular bank took in their derivative exposures. In return, no economic activity was done between the banks. “Because all the big banks’ had been involved to an unknown degree in risky derivative trading, no one could tell whether any particular financial institution might suddenly implode,” says Denning.

However, after the collapse of Lehman Brothers, banks continued exposing themselves to derivatives – increasing the total exposure to $500 trillion globally. If the banks collapse due to derivatives, it could lead to a stagnant market.

In addition to this, a new bill (Bill 292-I22) – drafted entirely by Citigroup lobbyists – passed December of 2015. This bill repeals the Dodd-Frank Law, ensuring Congress bails out the banks – even if they lose out in the derivative market. However, with trillions of dollars in derivatives exposure, this could prove to be a difficult task.

Have you ever stood for something you believed in? Well, that’s what Colin Kaepernick did in the third week of this preseason. On Aug 26, 2016, Colin Kaepernick of the San Francisco 49ers sat during the national anthem when the 49ers were playing the Green Bay Packers. Colin sat on the bench after the game telling the NFL “he would not stand up to show pride in a flag for a country that oppresses black people and people of color”. He also said “He would donate a 1 million dollars,” and on Sep. 2, 2016 he did. Then on Sep.

7, 2016 he pledged to donate money from jersey sales. During the fourth week of the preseason Eric Reid of San Francisco 49ers, Jeremy Lane of the Seattle Seahawks, and Brandon Marshall of the Denver Broncos also took a knee during the national anthem. Later during week one of the NFL season the Seattle Seahawks were going to try to take a knee as a team but they could not get everyone to agree, so they linked arms during the national anthem, Arian Foster, Kenny Stills, Jelani Jenkins and Michael Thomas all took a knee during the national anthem and Robert Quinn and Kenny Still both took knee during national anthem both of them being a part of the Los Angeles Rams. Later that week Jeff Fisher, head coach of the Los Angeles Ram, asks that Robert Quin and Kenny Still please not continue with kneeling. Robert Quinn response was “I respect Coach Fisher”.

This is not the first time someone or people had stood up for something they believed in. They first time was during the 1936 Summer Olympics. The Olympics was held in Berlin, Germany, the opening done by Adolf Hitler. Hitler thought only blue eyed and blonde people should complete in the game, but Jesse Owens ignored that won 4 gold medals and stood on the winner podium.

Now Colin and other NFL are kneeling for that they believe in. The San Francisco 49ers ownership is backing Colin Kaepernick and has also donated 1 million dollars. NFL player and other celebrities have been weighing in on Colin Kaepernick. Jerry Rice (long time 49er’s Wide reviver) disagreed with Colin Kaepernick and does not like how he is going about this. When Colin first kneeled Arron Rogers of the Green Bay Packers said he did not support Colin Kaepernick. So everyone who kneeled with Colin are supporting him and his right to protest. No matter what other people say or do, Colin Kaepernick continues to kneel and mostly like will until something is done.

Recently Colin Kaepernick, a quarterback for the San Francisco 49ers, refused to stand up during one of their football games to sing the national anthem with the rest of the stadium. Kaepernick has

Kneeling for what you believe in… Photo By: bleacherreport.net

previously stated that he sat down during the anthem to create a statement over the “Black Lives Matter” movement. The movement has been ongoing since 2012, but presently the anthem is being protested against. Why now?

Because of the election coming up, the black vote is heavily favored for Hillary Clinton. About 70% of the democratic vote consists of African Americans. Now that more and more Americans are beginning to protest against the national anthem, this will encourage the African Americans who consider themselves a part of the liberal and democratic parties to vote for Hillary rather than Bernie or even Trump.

Why Now?.. Photo By: washingtontimes.com

Since Colin Kaepernick has sparked the rise, or sitting, against America’s anthem, supporters of Black Lives Matter have been encouraged to stay seated during the anthem as well as protest more. Now that the protest has grown, the election could be greatly changed, but for better or worse?